Correlation Between Global X and IShares Self

Can any of the company-specific risk be diversified away by investing in both Global X and IShares Self at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Global X and IShares Self into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global X Autonomous and iShares Self Driving EV, you can compare the effects of market volatilities on Global X and IShares Self and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Global X with a short position of IShares Self. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Self.

Diversification Opportunities for Global X and IShares Self

0.37

Correlation Coefficient

Global X  IShares Self

Weak diversification

The 3 months correlation between Global and IShares is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Global X Autonomous and iShares Self Driving EV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Self Driving and Global X is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Global X Autonomous are associated (or correlated) with IShares Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Self Driving has no effect on the direction of Global X i.e., Global X and IShares Self go up and down completely randomly.

Pair Corralation between Global X and IShares Self

Given the investment horizon of 90 days Global X Autonomous is expected to generate 0.71 times more return on investment than IShares Self. However, Global X Autonomous is 1.41 times less risky than IShares Self. It trades about 0.14 of its potential returns per unit of risk. iShares Self Driving EV is currently generating about 0.06 per unit of risk. If you would invest  2,170  in Global X Autonomous on September 12, 2024 and sell it today you would earn a total of  242.00  from holding Global X Autonomous or generate 11.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Global X Autonomous  vs.  iShares Self Driving EV

Global X Autonomous

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Autonomous are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares Self Driving

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Self Driving EV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, IShares Self may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and IShares Self

The main advantage of trading using opposite Global X and IShares Self positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Self can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IShares Self will offset losses from the drop in IShares Self's long position.

The idea behind Global X Autonomous and iShares Self Driving EV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.